What's up with this: Dow up big, with oil up big? For months, the markets have struggled against the oil juggernaut, often moving in inverse step with oil. Today, the Dow closes at its highs with oil up nearly $5?
Traders are looking for reasons, which include:
1) Short covering in front of employment data?
2) GDP tomorrow: setting up for 2 + % growth? We are expecting 2.3% growth in the GDP, but some think it will be stronger.
3) End of month gyrations?
Financials have bottomed! (we think). Energy stocks led, but financials reversed their losses as well. This is bolstering the bull position that Merrill'sactions yesterday represented a watershed event. Under this thesis, Merrill demonstrated subprime CDO's are not a bottomless pit, there is actually a number where there is a buyer.
As for energy stocks, after being beaten up all month they roared back: Oil service up 5.7% (best since 3/00), Amex Oil index up 5.4% (best since 6/06).
Still, this was a strange trading day: 2 stocks advancing for every 1 declining, with oil up nearly $5.
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